IX. THE IN-AREA RENEWABLE ALTERNATIVE

According to CBD/Sierra Club, the Decision errs in finding that the In-Area Renewable Alternative is infeasible, and rejecting it in favor of the Approved Route on that basis. They argue that the Commission's reasons for finding that alternative infeasible are inadequate because: (1) the alternative meets all project objectives; (2) the Decision incorrectly concludes that the alternative would not further the policy goal of reducing GHG emissions; and (3) the cost analysis is flawed, and is, in any event, is an inadequate basis for finding infeasibility.

SDG&E responds that under CEQA, the reasons for finding an alternative infeasible are broader than CBD/Sierra Club suggest. According to SDG&E, the Decision's finding that the In-Area Renewable Alternative will not further the Commission's renewable goals to the same extent as the Approved Route is supported by substantial evidence. In addition, SDG&E maintains that the cost analysis is adequately supported, and that cost is a particularly important factor for Commission-approved projects.

The In-Area Renewable Alternative is "a combination of various San Diego area renewable projects that collectively could provide up to 1,000 MW of nameplate capacity generation by 2016." (Decision, at p. 240.) The EIR concludes that this alternative is potentially feasible, and that it tentatively meets the three basic objectives of the project (i.e. reliability, lower cost energy, delivery of renewables from Imperial Valley). (EIR GR-2.) However, the EIR notes that the agencies must make the final findings regarding feasibility of alternatives. (Ibid.)

Upon review, we acknowledge that the Decision's analysis of the feasibility of the In-Area Renewable Alternative is not entirely clear, and there is some inconsistency in the Decision's discussion regarding the extent to which certain project alternatives are met by the In-Area Renewable Alternative. However, we ultimately conclude, based on evidence in the record, that the In-Area Renewable Alternative does not meet the goals of reducing the cost of energy or accommodating renewable energy development in Imperial Valley and other sources in San Diego to the same extent as the Sunrise project. (Decision, at p. 255-256.) On these grounds, the Decision concludes that the In-Area Renewable Alternative, along with the two other high-ranked alternatives, is infeasible. (Id. at p. 256.) To the extent language in earlier sections of the Decision is inconsistent with these conclusions it is overruled. Accordingly, we will modify the Decision to ensure consistency with our ultimate conclusions regarding the In-Area Renewable Alternative.

Beyond the language which will be modified, the Decision's reasoning regarding the infeasibility of the In-Area Renewable Alternative is legally sound and meets the requirements of CEQA. The feasibility of alternatives is considered at two separate stages in the CEQA process. First, alternatives are screened for potential feasibility before preparing the EIR, in order to determine which alternatives merit further review. (Guidelines, § 15126.6 (a).) Later, where there are environmentally superior alternatives, an agency must find them infeasible before approving an environmentally inferior project. (Guidelines, § 15091 (a)(3).) At this later stage, "`feasibility' under CEQA encompasses "desirability" to the extent that desirability is based on a reasonable balancing of the relevant economic, environmental, social, and technological factors." (City of Del Mar v. City of San Diego (1982) 133 Cal.App.3d 401, 417) and the degree to which the project is consistent with the project objectives. (Sierra Club v. County of Napa (2004) 121 Cal.App.4^th 1490, 1503.) Pursuant to CEQA, therefore, it is acceptable for an agency to reject an alternative as infeasible, when the EIR concluded it was feasible for the purpose of environmental review. (Mira Mar Mobile Community v. City of Oceanside, supra, 119 Cal.App.4^th at p. 491) As with all other CEQA holdings, the feasibility findings must be supported by substantial evidence.

Our conclusion that the In-Area Renewable Alternative is infeasible because it would not facilitate as large an amount of renewable energy is legitimate and based on substantial evidence. Based on CAISO modeling cited within the Decision, the Decision projects that the Approved Route will "facilitate the development of over 1,900 MW of Imperial Valley renewables between 2011 and 2015." (Decision, at p. 255.) In contrast, the In-Area Renewable Alternative proposes a total of 1000 MW, 900MW of which are intermittent. (Ibid.) As discussed, facilitating renewable development and, in particular, facilitating the transmission of renewables from the Imperial Valley is a basic project objective.

The higher energy cost of the In-Area Renewable Alternative is also a legitimate basis for our finding of infeasibility and is based on substantial evidence. Assuming a 33% RPS requirement, the Decision concludes that the Approved Route will create a net benefit of $115 million a year, while the In-Area Renewable Alternative would generate significantly less than $93 million, the amount that the lower cost All-Source Generation Alternative would create. These conclusions are based on substantial evidence which includes CAISO modeling, as well as SDG&E's estimates. (See SDG&E Exhibit SD-142, Table 11-6, 14.)

Despite the fact that there is evidence in the record to support our cost conclusions, CBD/Sierra Club argue that the evidence presented regarding the cost of the In-Area Renewable Alternative lacks the required uncertainty analysis. As the Decision notes, that analysis was not performed for the Sunrise project. (Decision at p. 22.) Yet, although an uncertainty analysis was not performed, CAISO and SDG&E otherwise did analyses of the costs of project alternatives. This analysis included consideration of a number of variables, some requested by intervenors. Thus, there is substantial evidence to support the Decision's conclusion that the Sunrise project has greater cost benefits than the In-Area Renewable Alternative.

CBD/Sierra Club's next argument that extra cost is not a sufficient basis for a finding of infeasibility of a project alternative is misplaced. CBD/Sierra Club rely on authority which indicates that a project being more costly does not make it infeasible unless the extra costs make the project impracticable. (e.g., Kings County Farm Bureau v. City of Hanford (1990) 221 Cal.App.3d 692, 736.) However, these cases concern the cost of the project for the project proponent. The Sunrise project is fundamentally different since the cost issue here is the cost of energy that ultimately ratepayers pay, and one major objective of the project, as well as one of the Commission's mandates, is to ensure reasonable prices for the cost of energy for consumers. (See Pub. Util. Code, § 451.) Therefore, whether an alternative will result in lower energy costs is a relevant consideration for judging the feasibility of the alternatives.

The facts that the In-Area Renewable Alternative will result in a lower cost benefit and facilitate less renewable development are sufficient reasons to find that alternative infeasible. Therefore, there is no legal error in the Commission's findings. As discussed, some language concerning whether the alternative meets the project alternatives will be modified, as set forth in the ordering paragraphs, for consistency and clarity.